Selling your house for sale by owner (FSBO) may seem like an attractive prospect if you’re trying to reduce your selling costs. Saving the commission, you would have otherwise paid a real estate agent could mean you pocket thousands more on closing day. But is selling your home without a real estate professional really as straightforward as it seems? Although it sounds more financially appealing, the real estate sales process isn’t as easy as you might think.
If you’re thinking about selling your own home, keeping reading to learn more about the pros and cons of the FSBO process.
What Is For Sale by Owner?
Selling your home as a FSBO means that you sell it without any representation from a real estate professional. This means that you market your home, find the buyer, and manage all of the contracts and closing coordination yourself.
According to the National Association of Realtors, just 11% of sellers in 2018 sold their home without the help of a real estate agent. Another 10% of homeowners also tried to sell their homes independently but eventually hired an agent for help.
On average, the typical FSBO home sold for $200,000 compared to agent-assisted home sales that averaged $280,000.
According to these stats, the average sales price of a house sold with a real estate agent in 2018 was around 40% higher than the price of a FSBO home.
This can potentially mean one of two things:
- FSBO sellers tend to price their homes inaccurately
- FSBO sellers sell their homes for less than they’re worth due to a lack of expertise or negotiating skills.
Why Do People Decide To Sell For Sale by Owner?
There are many reasons why a seller might decide to forgo professional help and sell their home independently.
Some common reasons include:
To Cut Out Commission Costs
A report by the National Association of Realtors found that 37% of sellers who opted to sell their home as a FSBO did so to save money. A realtor commission is typically 6% of the sales price. This is usually split between both the listing agent and the buyer’s agent equally. On the median home sales price in the U.S., of $256,663, this equals $15,399.
Although this seems like a huge saving, as the earlier statistics have shown, FSBO homes tend to sell for much less than homes listed with an agent. Plus, if a buyers agent brings pay the buyer, they still expect to be paid a commission.
They Have a Buyer Lined Up
Some people opt to sell without an agent because they already have a buyer lined up for their home. Of course, finding a buyer is not the end of the real estate process — there are also inspections, appraisals, and sales contacts to complete.
If you’re planning to sell as a FSBO, it’s crucial that you have a basic understanding of your state’s real estate laws. In addition, many states require a real estate attorney or title company to oversee the final closing documents.
To Speed Up the Sales Process
Many homeowners believe that selling as a FSBO means a quick sale. By cutting out the middlemen, some sellers think they can get their house on the market and sell faster. Of course, in this scenario, the seller still has to market their home and find a buyer.
According to Realtor.com, as of September 2020, houses spent an average of 54 days on the market. With most buyer financing taking a minimum of 30-45 days to finalize, realistically, FSBO’s aren’t saving much time.
What are the Benefits of Using a Real Estate Agent?
There is a lot of work involved in selling a house, from finding a buyer to navigating the inspection and appraisal process to closing day.
Some responsibilities of a real estate agent include:
- Accurately pricing your home – Competitively pricing a home is the most effective way to sell a home.
- Market your home effectively – Marketing can include professional photography, virtual tours, and print materials.
- Enter your home into the Multiple Listing Service database – The MLS is the most comprehensive database of active listings in the U.S.
- Schedule viewings and open house events – Open houses are a great way to attract potential buyers to your home.
- Negotiate with the buyer’s agent – Agents are expert negotiators who can help get you the best sales price.
- Advise you on the home inspection and appraisal process – Sometimes, issues arise during the sales process, which may be necessary to problem solve. Real estate agent’s experience can be invaluable in this instance.
- Advise you on the sales agreement – Your real estate agent can help read over any offers you receive and help you create a counter-offer.